Higher gas prices cut into Americans’ overall spending, leading to the slowest sales growth at Walmart’s US stores since the earliest months of the pandemic.
The nation’s largest retailer earned $6.4 billion in net income in the three months ending July 31, thanks to strong online spending and a massive $2.9 billion tariff refund, the largest yet reported.
Still, Walmart shares (WMT) fell more than 9% in early trading Thursday after sales growth at US stores, excluding fuel, rose only 2.6% in the quarter compared to 4.6% a year ago. That’s the slowest since February through April of 2020.
Walmart is often viewed as a bellwether for the strength of consumer spending. The slower growth in stores is partly due to lower drug pricing for GLP-1 weight loss drugs, as well as more customers choosing to shop online rather than in physical stores.
But overall, higher gas prices are cutting into American’s ability to spend on other things. CFO John David Rainey said Thursday there is “arguably a softer consumer environment than in February” before gas prices spiked.
